This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, click the "Reprints" link at the bottom of any article.

January 29, 2013

FSI’s FA Membership Growth Strategy Appears to Be Working

“The strategy is working,” said Dale Brown matter-of-factly during a media briefing on Tuesday morning in San Diego at the Financial Services Institute’s annual OneVoice conference. Brown, the president and CEO of FSI and the quiet but effective face of the independent broker-dealer organization, was referring to FSI’s strategy of growing membership and member engagement in the group. The goal of FSI, Brown said, was to build a “healthier, more business-friendly environment” in Washington, in particular by leveraging its now 35,000 advisor members as “citizen lobbyists.”

Brown; FSI’s 2013 chairman, Larry Roth of Advisor Group; and vice chairman Mike Mungenast of ProEquities told the early-morning gathering that the strategy of growing an engaged membership and building its lobbying efforts in Washington and the states was reflected in the growth of its budget. In 2010, when FSI instituted a five-year plan, the group’s overall budget was $3.5 million. In 2013, the budget will be over $7 million.

That revenue growth has come from a “substantial” increase in membership dues—more than double, said Brown—that was implemented last year. While Brown admitted that the group did lose some members because of the increase, the overwhelming number of BD members (now at 98) “voted with their dollars” and anted up their dues.

A total of 53 member firms have partly or fully subsidized membership for their FAs, FSI said—20 firms fully subsidize their advisors’ membership, while another 33 firms “facilitate” their FAs’ membership by deducting their membership fees through their commissions.

So do advisors re-up once their BDs stop subsidizing membership? Brown said that the renewal rate was running at an average of 70%, since advisors “recognize the value” of their membership. Mungenast's broker-dealer is one example; from last year's 272 FSI members, there are now about 1,100 ProEquities members of FSI. That perceived value, said FSI Executive VP and General Counsel David Bellaire, who also spoke at the media breakfast, emanates from FSI’s advocacy victories, which in turn partly come from the engagement of its members on issues like the maintenance of the independent contractor status for IBD reps.

While he said FSI was “trying to affect a broad range of issues,” Bellaire said the group’s top effectiveness is at FINRA and the SEC, while it is also “engaged” with the Financial Stability Oversight Council (FSOC), the Consumer Financial Protection Bureau (CFPB) and state legislatures and securities commissions. Brown added that FSI’s approach is to build “constructive working relationships” with regulators and legislators, that “we’re not bomb throwers,” and that FINRA chief Richard Ketchum has complimented the group on the quality of its comment letters and testimony. “We’re not coming in as whiners,” Brown said.

FSI's advocacy staff has grown from two staffers last year to six this year with more hires on the horizon, Bellaire reported, and Roth suggested that with 35,000 "citizen lobbyist" FA members, the FSI will do "a better job at educating" regulators and legislators in Washington and the states. As for the newly nominated head of one of those regulators, Mary Jo White of the SEC, Bellaire said simply, "We look forward to working with her."